What paperwork is required when selling a car privately

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Most private car sales go smoothly. Just use a little common sense, follow our guide, and you should be good to go whether you're a buyer or seller.

The paperwork and payment are easiest when the seller owes no money on the vehicle and already has the title in hand. But even if this is not the case, there are certain precautions you can take which offer protection no matter the situation.

The following guide offers general best practices when buying or selling a used car to a private party. The specific requirements for transferring a title differ slightly from state to state, so always be sure to check with your local DMV for details.

Scenario 1: Seller Has the Title

This is the best case scenario. First, both parties should fill out and sign a Bill of Sale which lists the Vehicle identification number (VIN), agreed purchase price, odometer reading, and name/address of the buyer and seller.

Next, the buyer needs to take care of the payment. The best way is at their bank, in person. The buyer should get a cashier's check made out to the seller for the amount agreed to.

Another option is to use an escrow service. We recommend Escrow.com, which protects both buyer and seller.

Whatever you do, don't agree to wiring money when doing a private party sale - there is simply too much fraudulent activity associated with this.

After the payment has been transferred, the seller needs to sign the title over to the buyer (instructions are normally provided on the back). The seller will then need to contact the DMV within 5 days to transfer ownership and release themselves from any liability for the vehicle.

Again, check with your local DMV as each state has slightly different requirements.

Scenario 2: Seller Does Not Have the Title

If the seller still owes money on the vehicle, then their lender will be in possession of the title. It will only be transferred when the seller has paid off the loan in full.

In this scenario, there are basically two options. The buyer and seller can both go to a local branch of the lender (if it's available). The buyer can pay the lender directly and provide them with their name and address so they can fill out the paperwork and have the title transferred.

The other option is to complete the bill of sale and have it notarized to help protect the buyer against fraud.

The buyer will then make payment either through check or escrow service, and the seller will use that payment to pay off the loan and get the title. In the meantime, the buyer will have to take the bill of sale to the DMV and get a temporary operating permit so they can use the vehicle while waiting for the title.

Once the seller gets the title from the lender (usually in about 10 days), they will then mail it to the buyer and the sale is complete. This option requires a bit of trust by the buyer since they will have to make a payment without a title.

That's why it's important to get the Bill of Sale notarized and why you should consider using an escrow service.

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About The Author

By the time you are ready to sell, you should have a good idea of how much your car is worth. To prove your car’s true value to a prospective buyer, it will help to have some documentation ready that goes beyond the vehicle description you presented in your advertisement.

We’ve made a list of the documents you’ll need to make your private sale as smooth as possible.

Vehicle History Report

A vehicle history report will show your car’s history of accidents, repairs, routine maintenance, and number of owners. Kelley Blue Book heavily relies on the vehicle history report to establish how much vehicles are worth.

To get a history report, you need the vehicle identification number (VIN) or license plate number. Most savvy sellers will get this report so they can address any errors in the report and know ahead of time how to answer questions from the potential buyer. Carfax and AutoCheck are two good places to start when ordering a vehicle history report, but there are many others.

Maintenance Records

It’s a good idea to round up the most recent maintenance records for your prospective buyer. These records will include more essential details than the vehicle history report. That way, if your buyer has questions about previous repairs or regular maintenance, you’ll have the information right when you need it.

For example, if your driver’s door is swinging open with less control than your passenger door, the buyer may notice it on the test drive. As you prepare your car to sell, take note of any quirks you’ve become accustomed to and find out how much the repairs would cost. You can pay for the repairs yourself and keep the records to show the potential buyer. If you don’t have the finances to pay for repairs, you can offer an itemized list of repair costs from a mechanic to show complete transparency and ensure a fair price for everyone. If you go the second route, be prepared to either deduct the repair costs from the asking price or make a case that it’s already priced with those deductions.

Warranty Documents

If your vehicle still has a factory warranty on the powertrain or, better yet, bumper-to-bumper coverage, be sure to include the paperwork to prove it. Not all warranties are made equal, but in many cases, warranty documents could potentially boost your sale price depending on the terms and time of the warranty.

Owner’s Manual

When you’re buying a used car, you probably feel a sense of relief when you see the owner’s manual tucked away in the glove compartment. Your car’s future owner probably feels the same way. It’s important to have safety information handy in case of an emergency or when you need information about your car and don’t have internet access for the virtual manual.

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